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in Rancho Palos Verdes, CA
Both DSCR and hard money loans skip W-2 income verification, but they serve different investor strategies. One funds long-term rentals based on cash flow, the other closes fast for fix-and-flip deals.
Rancho Palos Verdes investors use these tools differently. DSCR works for coastal rental properties you plan to hold. Hard money fits quick acquisitions and major renovations before refinancing out.
DSCR loans qualify you based solely on rental income. If the property generates enough rent to cover the mortgage payment by 1.0x to 1.25x, you're approved regardless of your W-2 income or tax returns.
These are 30-year fixed loans with competitive rates for investor financing. You can finance up to 80% LTV on purchases, sometimes higher on cash-out refinances. No income docs, no DTI calculations, no employment verification.
Closing takes 3-4 weeks on average. You need 620+ credit and 20-25% down. The property must be investment-only, not owner-occupied, and it needs to appraise with strong rental comps.
Hard money loans fund based on property value, not income or credit. Lenders care about the asset and your exit strategy. You're borrowing against what the property will be worth after repairs.
These are short-term loans, typically 6-24 months. Rates run 9-14% with 2-4 points upfront. You can close in 5-10 days with minimal paperwork. LTV goes up to 65-75% of purchase price, sometimes 90% of ARV including rehab costs.
Hard money works for properties that won't qualify for traditional financing yet. Distressed purchases, major renovations, quick closings against cash offers. You refinance out once the property is stabilized and rent-ready.
DSCR gives you 30-year fixed rates in the 7-9% range. Hard money runs 9-14% with short balloon terms. DSCR costs less monthly but requires the property to already generate rent. Hard money costs more but funds properties that aren't rent-ready.
Credit matters more for DSCR—you need 620 minimum, ideally 680+. Hard money lenders care less about credit scores and more about equity and exit plans. DSCR requires standard appraisals and rental comps. Hard money uses as-is value plus ARV analysis.
Closing speed separates them clearly. DSCR takes 3-4 weeks with full underwriting. Hard money closes in days when you need to compete with cash buyers or grab a distressed deal before someone else does.
Choose DSCR when you're buying a property that's already rent-ready or currently tenanted. It works for stabilized investments you plan to hold long-term. Lower rates, longer terms, predictable payments.
Choose hard money when speed matters or the property needs work. Fix-and-flips, major renovations, distressed purchases, competing against cash offers. You'll refinance into DSCR or conventional once the property is stabilized and generating rent.
Many Rancho Palos Verdes investors use both strategically. Hard money to acquire and renovate, then refinance into a DSCR loan once tenants are in place and cash flow is proven. That's how you maximize leverage while minimizing long-term carrying costs.
Most DSCR lenders require 6-12 months of ownership before refinancing. You need time to establish rental income and get tenants in place before the property qualifies.
Hard money can finance up to 90% of ARV including rehab costs. DSCR typically caps at 80% LTV on stabilized rental properties with strong cash flow.
Yes, but lender appetite varies. DSCR has clearer guidelines for high-balance loans. Hard money depends more on the specific deal and your equity position.
Hard money loans often have prepayment penalties for the first 6-12 months. Factor that cost into your refinance timeline and budget accordingly.
DSCR lenders typically require 6-12 months of reserves per property. Hard money lenders focus more on exit strategy than liquid reserves after closing.